Trump's new tariffs stir global trade tensions. What products are affected?
President Donald Trump announced over the weekend the introduction of new tariffs on goods imported from Mexico and Canada at a rate of 25 percent, along with an additional 10 percent duty on products from China. Which products have been affected by the new charges?
White House spokesperson Karoline Leavitt stated that the new tariff rates took effect on Saturday, February 1st. She added that Donald Trump is considering an additional 10 percent charge on all goods imported into the United States.
Goods affected by tariffs worth hundreds of billions of dollars
A 25 percent tariff is applied to products from Canada. A lower rate is applied to gas, electricity, and crude oil, where the tariff is 10 percent. The value of crude oil imported by the U.S. from Canada last year amounted to nearly $100 billion.
Cars, alcohol, electronics
Regarding products from Mexico, experts cited by AP point out that the country is a significant exporter of cars and car parts to the USA. The market size reaches approximately $150 billion annually. The tariffs also impacted alcohol. The import volume of popular tequila from Mexico to the USA reaches about $5 billion.
On the other hand, China mainly supplies electronics to the USA, with a product value exceeding $130 billion. Tariffs have affected imports of toys and sports equipment, which exceed $30 billion, furniture, which is $20 billion, and footwear, which is almost $8 billion.
In response to the decision, Canada and Mexico quickly announced the introduction of their tariffs, while China announced that they would take "necessary countermeasures." What these will be is yet unknown.
Tariffs may cost the average consumer $2,400
According to estimates from ING, implementing all the tariffs announced by Trump could increase the annual expenses of an average American consumer by $2,400. Experts from Capital Economics predict that the effective tariff rate in the USA will rise from the current 2.4 percent to 31 percent, reaching its highest level in history.
Inflation could rise from the current 2.9 percent to about 4 percent, which is twice the Federal Reserve’s target. This level would correspond to indicators from mid-2023 when the Fed maintained the interest rates at the highest level in two decades.
Do tariffs harm the US economy?
Trump and his allies, including the new Treasury Secretary Scott Bessent, argue that "the tariffs introduced during Trump's first term did not contribute to rising inflation." However, economists from Capital Economics claim that the previous tariffs were too low to significantly impact the economy.
The Brookings Institution notes that previous tariffs brought some benefits to American industry, such as creating 1,800 new jobs at Whirlpool and other companies producing washing machines. However, the overall number of jobs in the manufacturing sector during Trump's first term fell from 12.4 million to 12.2 million. And the cost of creating those jobs turned out to be enormous.
